Here comes the bubble again? BofA Merrill Lynch comments
European equities continued their recent love affair with 4th week of strong
inflows, Bank of America Merrill Lynch says.
Did June ever happen?
Bond inflows were huge in Europe over the last week, a sign that the central bank dovishness of late is again driving a thirst for yield. High-yield credit inflows were the largest ever in dollar amount, and the highest in % terms since September last year. High-grade inflows and loan flows were also strongly positive, and European fixed-income funds had their largest inflow in 9 weeks.
Whatever the weather, European equities continued their recent love affair with a 4th week of strong-ish inflows. Last week’s losers however, were government bond funds, money market funds, European commodity funds and global EM debt (9th week of outflows).
The rule is flows follow returns. Note that yields have backed up sharply in Europe over the last week and to some extent the US. Keep an eye on the HYG Index (iShares $ HY ETF) which fell quickly and sharply in May this year and looks to have rolled-over again.
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